Capital Equipment News August 2017

MS: You also mentioned the expansion of the Master Rebuild Centre. What necessitated this project? HdP: The expansion was necessitated by the need to accommodate the bigger 78-litre capacity engines, especially considering the big population of these large engines in the mining industry. We saw the need to capacitate the facility to be able to help local customers optimise the lifecycles of their equipment, through overhauling of their engines, which has become a popular norm globally. Previously, we experienced high demand to rebuild our mid-range and heavy duty diesel engines only. Since 2010 we have seen an increase in demand for high-horsepower engine rebuilds, spanning from the QSK 19 to QSK 78. In a nutshell, the expansion of the facility was to increase high-horsepower engine remanufacturing capacity to meet demand for a rapidly expanding population of mining equipment powered by our popular QSK and K-Series engines. MS: You mentioned that southern Africa is probably the most stable business area for Cummins at this stage. What are some of the key growth markets at this stage? HdP: Our major growth sector in southern Africa remains the mining sector, despite the recent commodity crunch. But, as the world’s largest independent diesel engine manufacturer, we have a very diverse portfolio. Although mining might be the bulk of the portfolio, we are just as involved in other sectors including agriculture, oil & gas, marine, construction, road and rail transport. We have also taken it further to include natural gas, with current projects in countries such as Mozambique and Ivory Coast. Mining and Power Generation remain the biggest growth sectors at this stage. It is, however, mining that currently represents the largest market opportunity, despite the uncertainty of whether the mining downturn is over or not. MS: What is your outlook of the business? HdP: Capital investments are usually taken on a long-term view and Cummins is committed to supporting our customers in the region. Although stable macro-economic factors are very important in our investment decisions, we believe it is also important to identify potential, not just for today, but also well into the future. It is that view that allows Cummins to invest in the future success of its customers and its business. As a result, we have invested more than US$100+ million in the last seven years on the continent. That is a key indicator of our optimism in the long-term potential of our business on the continent. b

Cummins is a global entity operating in 190 countries worldwide

Du Plooy is in charge of aftermarket support in 11 SADC countries

Cummins has invested US$100+ million into growth and support projects in Africa in the past seven years

Since 2010 Cummins SA has seen an increase in demand for high- horsepower engine rebuilds

was the US$12 million investment in our new Regional Distribution Centre (RDC) in Johannesburg, officially launched in 2015. We have also recently expanded the Master Rebuild Centre to support the growing population of our high-horsepower engines in the marine, rail and mining sectors in the region. We have also invested heavily in our Training Centre in Johannesburg. It’s not just limited to South Africa, but caters for the region at large, offering training in customers’ local languages, because we appreciate the diversity of our territory. We appreciate the importance of training, whether to upskill our own employees, or as part of our social responsibility programmes. We also invest in the future of our company through our apprenticeship and graduate training initiatives, where we identify individuals from our communities to partake in these programmes. MS: You mentioned the RDC. Just how important is the facility to your aftermarket in addressing the previous logistical challenges? HdP: One of the biggest challenges we had was to keep track of the growing engine population register in the region. Cummins engines are used in 30+ applications and it’s not always viable for a branch and a dealer to stock all the aftermarket parts applicable to its area of jurisdiction and the applications we serve. That’s where the RDC comes into play, allowing us to distribute the necessary parts overnight across our southern Africa territory, ensuring minimal downtime to our customers. In the past we were very much dependent on branches and dealers stocking parts in their local premises, which was not sustainable because it compelled them to commit to a lot of inventory capital.

global warranty that we honour, irrespective of where the engine was manufactured, was bought or where it is being operated. Through our network of company- owned branches in the region, dealers and regional response teams, we are able to offer world-class aftermarket service, irrespective of the location of the product in the region. You don’t become a 98- year old business by just selling superior products; you have to invest and create an effective support network that gives customers peace of mind. We continue to invest in the strength of our distribution network and the development of our aftermarket capabilities. MS: What sort of investments have you made in recent years to boost your aftermarket support structures? HdP: One of the recent key initiatives

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